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HomeMy WebLinkAbout2016 04-25 CCM Study SessionMINUTES OF THE PROCEEDINGS OF THE CITY COUNCIL OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF HENNEPIN AND THE STATE OF MINNESOTA STUDY SESSION APRIL 25, 2016 CITY HALL - COUNCIL CHAMBERS CALL TO ORDER The Brooklyn Center City Council met in Study Session called to order by Mayor Tim Willson at 6:00 p.m. ROLL CALL Mayor Tim Willson and Councilmembers April Graves, Lin Myszkowski, and Dan Ryan. Councilmember Kris Lawrence-Anderson was absent and excused. Also present were City Manager Curt Boganey, Finance Director Nate Reinhardt, Public Works Director/City Engineer Steve Lillehaug, Director of Business and Development Gary Eitel, Planning and Zoning Specialist Tim Benetti, Deputy Director of Building and Community Standards Jesse Anderson, City Attorney Troy Gilchrist, and Carla Wirth, TimeSaver Off Site Secretarial, Inc. CITY COUNCIL DISCUSSION OF AGENDA ITEMS AND QUESTIONS Councilmember Graves requested discussion on Item 8c, An Ordinance Amending Chapter 12, Section 12-901, of the City Code of Ordinances; Limiting the Density of Rental Housing in the City, in particular how the decision was made to investigate the density of single-family rentals. City Manager Curt Boganey explained that interest was expressed by the City Council and it largely relates to a strategic goal established several years ago to encourage home ownership in Brooklyn Center. That goal was related to the fact that more and more neighborhoods were being increasingly occupied by investor held and rental properties. In addition, over the years, there has been a significant concern raised by residents about renters who may not maintain their property, hold loud parties, or other nuisance activities. Because of that, the City enacted the performance based rental program to hold the land owner more responsible and assure tenants were not creating nuisances. Mr. Boganey explained this ordinance is a tool that some communities have used. The Supreme Court decided to not overturn the ordinance, and it upheld the Winona ordinance, which has 30% threshold. Mayor Willson stated he has heard from a number of citizens worried about maintaining property values, high concentration of rentals, as well as detrimental activities. In addition, the City has aging single-family households with residents who know their neighbors, what is occurring, and are concerned about the density becoming too high. Councilmember Ryan stated he appreciates that question as this is a complex and daunting issue but in the end, the City Council needs to consider what has sustained neighborhoods in Brooklyn 04/25/16 -1- Center and that is homeownership, but in the last 20 years there has been a higher turnover. Councilmember Ryan commented on the benefit of Neighborhood Watch groups to increase civic engagement. He stated another issue is that the typical rent charged for a single-family home is about $1,430, which is based on the Section 8 voucher rate, but can be as low as $1,250 to in excess of $1,600 per month. Councilmember Ryan reviewed the mortgage calculation based on a $135,000 home, including principle and interest, taxes, and a minimum down payment would equate to an $857/month house payment, much lower than the rental rate. Mayor Willson stated the $1,400 rental figure is close to ownership once you add escrow, taxes, and other expenses. He stated the Council, by consensus, has directed staff to look into rental densities and report their findings. Now it is up to the City Council to determine if they want to take action. Mayor Willson stated if the court case referenced had a different outcome, the City Council wouldn't be able to consider this regulation. He has had enough constituents ask the City Council to look into this issue over the past four years, which brought the Council to this point. Councilmember Graves cautioned about making generalized comments on the type of people renters are as they may also have desire to become involved and engaged in their community. She stated she understands the benefit of homeownership but thinks that access to home ownership isn't equitable if they don't have enough money to obtain a mortgage loan. Councilmember Graves supported addressing that issue, to assist with home ownership by offering programs like a Home Stretch Workshop. Councilmember Myszkowski stated she has concern, given the conversations she has had with people over the past five years, that oftentimes judgments are tainted by bias towards renters and rental properties. She stated while engaging residents, they have expressed concern with rental properties based on the property's appearance. Councilmember Myszkowski commented on the importance of code enforcement so it is not obvious which homes are being rented. She noted the financial position of Millennials who come out of college with debt may be more interested in renting than buying a home, so the City needs to assure it remains a great place to start and a great place to stay. She stated if enforced, she thinks the City may have more rental properties than are currently licensed. Mr. Boganey stated while there may be some, it would be many fewer than before the City increased its efforts to identify rental properties. Councilmember Ryan referenced several studies and noted the long-term benefit of home ownership is being able to net considerable savings as rental rates increase over time and the ability to build net worth. Councilmember Ryan agreed some of the issues relating to home ownership need to be addressed at the State or Federal level as it is beyond the City's ability. Mr. Boganey stated the primary intent of the ordinance is to preclude a neighborhood or census block from reaching a 'tipping point.' That is the fundamental issue. He stated West St. Paul has had a 10% maximum density limit in place for 15 years and indicated they have not received significant pushback. The West St. Paul ordinance allows issuing a provisional license under certain criteria. He reported that West St. Paul feels their ordinance has been successful and beneficial in maintaining single-family neighborhoods. 04/25/16 -2- Mr. Boganey stated the proposed 30% threshold is much higher and the vast majority of Brooklyn Center's blocks are significantly under 30% so property owners will still be able to convert their homes for rental. He doubted this ordinance will have an immediate impact on that situation or ability for people to find a property to rent in Brooklyn Center. Mr. Boganey stated there is recent history of a substantial escalation in the number of homes converted from owner- occupied to renter-occupied due to the economy and increasing property values. But relative to other locations in the metro area, the affordability of Brooklyn Center homes keeps the City attractive for investors so there will continue to be pressure to convert owner-occupied properties to renter-occupied. Mr. Boganey stated the point of the ordinance is to ask at what point in a neighborhood are there enough or too many. Mayor Willson stated another issue is corporations that own multiple rental properties that, keeping their bottom line in mind, are contesting the tax rate on rental property. He noted this is a disturbing trend as lowering property valuations results in lower taxes being paid and fewer dollars for the City to operate. Councilmember Graves stated if the ordinance is adopted, there could be more vacant homes as they could not be converted to renter-occupied and property values could be affected by regulating the rental license as well. She asked if Brooklyn Center is a hospitable City in which to live, noting she takes issue with the citations for long grass as residents own the property and should be able to do what they want. Councilmember Graves agreed there is the need for balance to be hospitable while also assuring neighborhoods in which residents want to live. Councilmember Myszkowski asked whether the City is finding that the current rental license program is not as effective or have rentals outgrown the City. Mr. Boganey stated this ordinance consideration is not in response to thinking the current ordinance is ineffective. He stated the ordinance does only one thing for sure and that is keeps any given block from getting beyond what is a reasonable ratio between owner-occupied and renter-occupied. He explained that while there are exceptions, on average there are more maintenance issues and police calls to renter- occupied properties. Councilmember Myszkowski referenced a recent newspaper article that described the cost and amenities of a Brooklyn Center home. She thinks people are feeling more comfortable with the economy but at the same time, hopes homeowners do not feel stuck if there is another housing depression. Mayor Willson stated it comes back to the constituents asking the City to look into this issue. Councilmember Ryan referenced a research paper that indicated no agreement on the ideal ratio at which point renter-occupied houses relative to owner-occupied homes becomes excessive but that is a social experiment he does not want to take place in Brooklyn Center. He stated his intent to support the ordinance to avoid a high concentration of renter-occupied houses within a census block. Mayor Willson stated additional considerations are the City's high concentration of poverty, individuals who are poor, all four schools being segregated, and the push of Level III sex 04/25/16 -3- offenders to Brooklyn Center. He stated if there is another real estate market meltdown, the City could have blocks of homes that are not maintained. Councilmember Graves asked about the number of complaints received as she has not seen it. Mayor Willson stated she has not served on the Council for the past three to four years but he has been asked by a significant number of constituents for the City to look into the rental density situation. Mr. Boganey stated generally speaking, when the City exercises its police powers with a rental property, the standard typically is to hold the owner to minimal standards. The City cannot require above and beyond minimal standards of health, safety, and welfare. Mr. Boganey explained staff does encourage homeowners, but the City cannot require beyond the minimum standards. Mayor Willson stated that is the same situation with owner-occupied homeowners. Mr. Boganey agreed but noted there is incentive when owner-occupied to go beyond the minimum to increase livability and the value of the property. That incentive is not the same with rental properties. Mayor Willson stated another question is the standard of housing stock the City wants in Brooklyn Center. April 11, 2016, Regular Session Minute Correction Councilmember Ryan requested the following correction to the Regular Session minutes of April 11, 2016: Page 6, 2nd Paragraph, 1st Line: "Ivan Lui, Executive Director of the Brooklyn Bridge Alliance for Youth, presented..." It was the majority consensus of the City Council to accept the correction to the April 11, 2016 Regular Session minutes. MISCELLANEOUS None. ADJOURNMENT Mayor Willson adjourned the Study Session at 6:45 p.m. 04/25/16 -4- STATE OF MINNESOTA) COUNTY OF HENNEPIN) ss. Certification of Minutes CITY OF BROOKLYN CENTER) The undersigned, being the duly qualified and appointed City Clerk of the City of Brooklyn Center, Minnesota, certifies: 1.That attached hereto is a full, true, and complete transcript of the minutes of a Study/Work Session of the City Council of the City of Brooklyn Center held on April 25, 2016. 2.That said meeting was held pursuant to due call and notice thereof and was duly held at Brooklyn Center City Hall. 3, That the City Council adopted said minutes at its May 9, 2016, Regular Session. ^6040wa;oz' - City Clerk Mayor 04/25/16